We Are Giving Out Some Financial Knowledge Today. Keep Reading If You Want to Improve Your Financial Situation.
Before going big, you need to start small. You don’t need thousands of dollars in your bank account to start improving your financial situation. The changes start daily, with small improvements that put you on the right path.
Today we’ll go through some of these small improvements, that you can start implementing right this moment.
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With that being said, here are 15 Small Financial Improvements to Start With.
1
Know Where Your Money Goes
You might know exactly where each cent goes every month, but you’d be surprised at how many people struggling with their financial matters have no knowledge of where their money goes.
A small, inconspicuous amount is debited each month with some obscure reference, but it’s only a small amount – so you don’t bother following up. Small amounts add up to large amounts, and by keeping an eye on where your small amounts go – could save you a lot of green every year!
2
Pay and Buy Everything You Need at the Beginning of the Month
All your bills, groceries, misc items, everything you need each a month.
This helps you to:
– have a clearer idea of how much your monthly basic needs actually cost.
– take advantage of bulk deals.
– Ensures you are covering your basic needs first, before spending on extra sh*t.
3
Don’t Tell Yourself You’re Bad with Money
Aluxers, we’re all guilty of this… we tell ourselves we suck at money, which is why we’ve literally released a video called 15 Signs You Suck At Money (and what to do about it). Your feedback on the video has been brilliant, with so many of you acknowledging that it’s exactly about you.
One of the key take-aways is to stop telling yourself you suck at money, because like any skill – being financially savvy can be learnt and the first step is to change your mind set.
Change your rhetoric and then start making the changes to start improving financially.
4
Familiarize Yourself with Financial Tools
We’re talking about everything… from how taxes work, how interest works, how capital works and so on.
Even a basic understanding of these tools and how to negotiate them can make a huge difference in the long run. And even if you are not using them right now, being aware of how they work will put you in a better spot to make better decisions down the line.
5
Save with a Purpose
Saving money for the sake of saving money is actually pretty bad.
For one, opportunity cost, meaning what you could had made with that money instead.
Secondly, you lose money in the long run, due to inflation.
If you have $100k in your bank account right now, and you leave it there for the next 20 years, that 100k will have a lesser buying power due to inflation. Banks always offer lower interest rates compared to inflation. This is also the reason why we advise getting familiar with financial tools and knowledge.
So saving money for the long run, or for retirement is a bad plan.
Does that mean saving is a bad habit?
Obviously not, but you need to save with a purpose. For example, saving money for a couple of years to be able to provide a down payment for a house is a good plan. Saving money for an emergency situation is also a good plan. But always have a plan for the money.
Get into the habit of saving, regardless of your income. If you can’t save 10$ when you’re making $100, you won’t be able to save $100 when you’re making $1000.
6
Improve Your Knowledge
The net is crammed with free resources to help you improve your financial knowledge, so no excuses that you can’t afford a financial advisor.
Keep up to date with your knowledge of financial trends, even if you don’t use them, be aware of them and their influence on the current economy.
And never stop learning Aluxers.
We’ve got a free download waiting for you courtesy of Audible. It’s Money: Master the Game, 7 Simple Steps to Financial Freedom by Tony Robbins. To listen, head to alux.com/freebook.
7
Live within Your Means
You might be thinking, Er Alux, you said, “small financial improvements and knowledge …” and this might sound huge but start off small. You eat cereal every morning, but you’re always buying the expensive sugar-coated cr*p… next time, buy oats instead. Not only is it healthier, but costs so much less.
That’s what we’re meaning, start small and you’ll see how it filters down to the bigger, unnecessary expenses.
8
Hang with People Who Have the Same Financial Goals as You
We’re not saying ditch your friends, but the friend who eggs you on to buy both sweaters, because “you deserve them,” is not going to help your finances.
Perhaps leave that friend at home when you go shopping!
9
Budget Your Life
For some reason, people get really defensive when they hear the word “budget”. Like it’s something bad that you are forced to do, given your situation. That can’t be further from the truth.
Budgeting means making sure you can do everything you want today, and do it again tomorrow, and next week, and next year.
Elizabeth Warren popularized the 50-30-20 budget rule, and it works pretty well for the vast majority.
The rule goes like this:
Out of your total income, take 50% for things that you need. Meaning a roof over your head, food and other basic needs. These are the things you need to be able to survive.
30% are for the things that you want but don’t need. Like Netflix, eating out, vacations and so on. Because life can’t be all about paying your bills and going to sleep… more on a scientific term for the later… And the last 20% is for investing and savings.
10
Have a Retirement Plan
Here’s the thing, there is absolutely no way anyone is saving during 40 years of work to last another 20-30 years of retirement. And relying on your government to provide for you is also a bad plan.
So have a plan.
Start getting educated about how people actually retire with enough money to live comfortably. Find what works for you and act on it.
11
Give Your Money Meaning
Right, so what do we mean here?
Let’s say you have a goal that by the end of the year, you want to have saved enough money to head to Mauritius for a holiday. Great. Next minute, you find yourself in front of an alluring sales stand, with a $12 lipstick in your hand… do you want your money to be spent on the lipstick or the trip?
Your money is the means to a holiday, don’t waste it on a non-essential like a lipstick, especially since you already have several at home.
12
Understand Price/Quality Ratio
We talked about things that are worth going premium, but this goes the same from the opposite side.
Price and value are not in a direct relationship. For example, there is a big difference between a $3 bottle of wine and a $10 bottle of wine. But between a 10$ and 100$ bottle, most people won be able to tell them apart.
Same with toothpaste, they are all pretty much the same, regardless of brands or price.
Organic food is another trap people get into. We suggest checking out “Seaspiracy” on Netflix.
When you identify what items are worth going premium and what you should buy cheap, you’ll see a big difference in your monthly budget.
13
Don’t Always Go For the Specials
You might have spent tons of time circling where all the great specials are in your local newspaper, but by the time you’ve driven from Uncle Sam’s to Walmart, to Target and then Whole Foods, you’ve wasted time, fuel and energy… and there is nothing special about that.
14
Use Technology
Forbes suggests using technology to help improve your finances by using apps that track your income and expenditure.
CNBC adds that “Smartphones have become mini financial coaches in the pockets of millions of Americans.”
Bank of America uses a virtual assistant called Erica, on its mobile banking app. Erica performs many functions, but one function is she alerts users when they’re nearing their overdraft facility. She helps those who struggle to budget while at the same time, making it easier for most people to make better financial decisions.
See what App suits your lifestyle and get more knowledge of this technology to help you improve financial matters.
15
Beware of “Frugal Fatigue”
Frugal Fatigue is sheer exhaustion from living frugally every day. It may work for a short while, but continually denying yourself pleasure, makes you grouchy and unpleasant. The problem with frugal fatigue is that it leads to large, impulse purchases.
So, grant yourself the small pleasures… they’re essential to living not only a healthy financial life, but your emotional, mental, and physical well-being depends on it too.
We hope we added value to your life today, and we would greatly appreciate you adding value to ours – by simply subscribing to our channel and hitting that bell notification.
If you want to treat yourself once in a while, spend your money wisely on useful things. Check out 15 Things You Should Spend Your Money On.
Question:
We’d love to hear your advice, Aluxers. What small financial improvement helped you a lot?
